Michael Ahearne is upbeat about the recovery. Photo / Michael Craig
Trade has returned to NZX-listed SkyCity Entertainment Group's businesses here and in Australia, its boss heralding a new phase after pandemic shutdowns since March 2020.
In an exclusive Herald briefing, chief executive Michael Ahearne was upbeat about how the business had recovered in the second half of its June 30, 2022, financial year.
Guests and customers were returning to hotel, gaming, restaurant and bar properties in New Zealand and Australia, he said.
"We're now in a new phase where people are coming back, borders are opening up, tourists are travelling and the second half of the year has definitely been better than the first," Ahearne said.
He was comparing this second half to the first half when SkyCity was hit by Auckland's 107-day lockdown from last winter to spring.
Then, the company lost around $1 million/day revenue for every 24 hours its Auckland properties were forced to remain shut.
On August 3, the company's landmark SkyTower will turn 25 and celebrations are planned for that - including perhaps the launch of a new tourism activity but executives are remaining tight-lipped about that.
Auckland produces the bulk of the revenue out of the four areas where SkyCity operates.
In the December 30, 2021 half-year, Auckland brought in $16m operating earnings ($94.9m in the previous corresponding period), Hamilton $9.6m (previously $18.1m), Queenstown $1.4m (previously $2.2m) and Adelaide $10.8m (previously $23.9m).
Now, the company has entered a major rehiring phase, seeking around 450 people in Australasia. More than 300 are needed in Auckland, Ahearne said.
Seek shows SkyCity is advertising for people to work in bar, restaurant, gaming floor, card table, casino floor staff, systems analysts, receptionist, human resources, customer services, housekeeping, porter, management, kitchen steward, chef, waiter and office positions.
Part-time and full-time staff were needed, Ahearne said.
Many part-time jobs had been filled from the tertiary sector pre-pandemic, he said.
"Without the international students around, we're definitely finding it harder to fill some of these positions," Ahearne said - although SkyCity is no different to many other businesses on that front, he stressed.
The business employs more than 4000 people in Auckland, Hamilton, Queenstown and Adelaide.
SkyCity's The Grill restaurant on Federal St has been closed since early last year.
Depot nearby is not open for breakfasts and has been operating at somewhat reduced hours but Ahearne said it was still extremely popular.
Andy's Burgers & Bar had also been shut for an extended period with no reopening plans at this stage, he said.
Asked when those venues were planned to reopen, Ahearne said reduced hours would continue to be the norm during this recovery phase.
He doesn't see any immediate return to full operations in the foreseeable future.
"This is the new normal," Ahearne said of the reduced operations.
Nor has the company been able to operate all its vast new Auckland VIP areas which cost it more than $35m.
In September 2020, the company opened a new VIP machine gaming area and Ahearne said at the time that the new invitation-only zone, labelled Black, was twice the size of the current VIP machine gaming space.
The area on the level-nine floor, previously a partly open deck, is at the top of the SkyCity Hotel Auckland and casino building at the Victoria St end between Hobson St and Federal St.
"A previously little-used open-air balcony has been given a complete transformation to create a tactile, voluptuous and highly refined space," Ahearne said at the time.
He toured the NZICC in the past week with Fletcher Building chief executive Ross Taylor.
This year, Ahearne has travelled overseas for about a month around Easter time on business, returning to his home country, Ireland, staying at the new SkyCity Adelaide hotel and having meetings in Australia, Spain and England.
He has joined the board of European-based Gaming Innovation Group. In April, SkyCity said it had paid E25m for an 11 per cent stake in that business, which provides technical support for SkyCity's online gaming platform.
GiG issued new shares to SkyCity for that 11 per cent stake, giving it access to equity it needed to expand. Also in April, GiG bought Sportnco Gaming SAS.
GiG offers SkyCity inroads into the sports gaming market which could be a big growth area for the Auckland-headquartered operation.
Adrian Allbon, Jarden's equity research director, released a new analysis of the stock a few weeks ago saying New Zealand's orange traffic light system gave reopening momentum to SkyCity.
"Our analysis of mobility trends shows an uptick in activity in line with the recent relaxation of Covid-19 restrictions in New Zealand while seeing a more gradual return in activity in South Australia.
"This data is in line with comments made at SkyCity's April trading update about encouraging improvement themes for Auckland/Hamilton, which were partly offset by Adelaide momentum remaining subdued."
The pace of Covid earnings recovery remained a key uncertainty, notwithstanding strong domestic gaming rebound evidence from the key New Zealand properties across previous lockdown cycles, Allbon wrote.
Debt remains a thorn in SkyCity's side: $713m has been drawn down from $940m facilities.
SkyCity has won an extension to its debt covenant waivers from its banking syndicate and private placement holders.
On April 14, the company gave a market update saying it was operating its New Zealand properties without restrictions on mass gatherings from that day.
Operating restrictions in Adelaide continued to be progressively relaxed, with no density limits or social distancing requirements currently, vertical consumption of alcohol permitted and increased capacity on table games - six players per table versus
three previously.
"Performance at SkyCity's land-based properties during 2H22 YTD has been significantly impacted by Covid-19 disruptions and operating restrictions due to Omicron outbreaks in both New Zealand and South Australia. However, trading has steadily improved over the period, particularly local gaming," the company said two months ago.
The second thorn in the company's side is the ongoing investigation by Australian authorities. The Australian Transaction Reports and Analysis Centre is undertaking an enforcement investigation into potential serious non-compliance by SkyCity Adelaide.
A year on and nothing is yet decided on that although AUSTRAC has already moved against SkyCity rival Crown Resorts.
Shares are trading at $2.67, down 27 per cent annually. The company has 760 million shares on issue, giving it a market cap of $2.02b. Its next big announcement will be in August for the full-year June 30, 2022 result.
Whether it will be able to reinstate dividends to shareholders or forecast some metrics on its 2023 year remain unknown.
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